In today’s world consumers are more conscious of their choices and the food they consume. Even in the world of investments, the ETF space is crowding up with many niche themes to make it easy for investors to invest in what they believe in. There is a growing demand for ESG (environment, social, and governance). In the broad ESG theme are niche topics like green energy, hydrogen fuel, vertical farming, and vegan ETFs.
Going Vegan
What is the first thing that comes to your mind when you hear vegan? Food and farming companies like Beyond Meat. The vegan market is growing as people are choosing healthy alternatives. There is a growing demand for alternative dairy products and meat substitutes. This is encouraging companies to launch innovative products. Fortune Business Insights expects the global vegan food market to increase at a CAGR of 12.95% between 2021 and 2028.
You can get a share of this growth with vegan ETFs. Vegan is such a niche market that there is no index that these ETFs can track. Hence, vegan ETFs have deployed a strategy to filter out companies that meet the vegan criteria.
Investing in Vegan ETFs in 2022 (ETF Comparison)
Updated as of 4/25/2022
The U.S. Vegan Climate ETF (VEGN)
- Assets Under Management: $69 million
- Expense Ratio: 0.60%
You will be surprised to know that the world’s first vegan ETF, the U.S. Vegan Climate ETF, has nothing to do with food. The ETF theme is more cause based, discouraging animal cruelty and saving the environment. I call it the Captain Planet of the ETF world.
The VEGN ETF takes the S&P500 Index and filters out companies that test on animals, sell animal products, and use animals in sports or entertainment. It also filters out companies that use fossil fuels, tobacco, and weapons. This filters out over 200 companies, including pharma companies, leaving the ETF invested in around 270 companies.
Among its top holdings are Tesla, Nvidia, and UnitedHealth, and neither of them has anything to do with food. Although they do meet the criteria of “no animal was involved or harmed while conducting business operations.”
Founded in September 2019, the VEGN ETF has $69 million in assets under management (AUM) and a management expense ratio (MER) of 0.60%. It is a little expensive as an average ESG fund has an MER of 0.4% This 0.2% premium is for the filter VEGN does to ensure the companies it invests in are animal-friendly.
As the VEGN ETF invests in tech and finance, it has delivered a strong return of 20.8% since inception, beating the S&P 500 Index return of 19.76%.
But if you mean food when you say vegan, there are two other ETFs and a Canadian investment firm investing in it.
VanEck Future of Food ETF (YUMY)
- Assets Under Management: $2.2 million
- Expense Ratio: 0.69%
Founded in November 2021, VanEck Future of Food ETF invests in global companies involved in sustainable agriculture or food innovation. It has $2.2 million in AUM, which it invests in 50 stocks. Its top holdings are seed company Corteva, fruit and vegetable supplier AppHarvest, and agriculture machinery provider John Deere.
Unlike VEGN ETF, the YUMY ETF invests in meat companies like Tyson if they are also involved in plant-based proteins. Its goal is to promote sustainable food. Even this ETF doesn’t truly meet the vegan concept. The ETF has an expense ratio of 0.69% and has slipped 9.3% since its inception. But there is scope for growth in the long term as people adopt sustainable food.
VegTech Plant-based Innovation & Climate ETF (EATV)
- Assets Under Management: $3.96 million
- Expense Ratio: 0.75%
Founded in December 2021, the EATV ETF overcomes the drawback of the YUMY ETF. The EATV only invests in plant-based food and technology companies. It meets all three goals of promoting a climate-friendly, animal-free, sustainable food and materials supply chain.
Disclosure: The author holds no position mentioned in this article. Freedom Stocks has a disclosure policy.
